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Howell v. Ketchikan Pulp Co. (8/15/97), 943 P 2d 1205
Notice: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska
99501, phone (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
STEVEN HOWELL, )
) Supreme Court No. S-7137
) Superior Court No.
v. ) 1KE-94-1195 CI
KETCHIKAN PULP COMPANY, ) O P I N I O N
Appellee. ) [No. 4867 - August 15, 1997]
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Ketchikan,
Michael A. Thompson, Judge.
Appearances: J. Michael Robbins, Law Offices
of J. Michael Robbins, Anchorage, for Appellant. Brewster H.
Jamieson and William A. Earnhart, Lane Powell Spears Lubersky,
Anchorage, for Appellee.
Before: Compton, Chief Justice, Matthews,
Eastaugh, and Fabe, Justices. [Rabinowitz, Justice, not
COMPTON, Chief Justice.
Steven Howell appeals the superior court's summary
judgment for Ketchikan Pulp Company (KPC) on Howell's breach of
contract and breach of warranty claims. We affirm.
II. FACTS AND PROCEEDINGS
Howell was employed as a pipefitter by Qualified
Contractors, Inc. (QCI). QCI, through its parent company General
Electric (GE), had a contract with KPC to repair KPC's boilers and
other machines. While repairing a KPC boiler, Howell was injured
by the explosion of another boiler in KPC's plant. He was struck
in the back with jagged metal, inhaled noxious gases, and lost
consciousness. [Fn. 1]
Howell did not have a contract with KPC; he brought his
contract claim as a third-party beneficiary to the contract between
KPC and GE/QCI. The only written contracts applicable to Howell's
employment repairing KPC's boilers were Requisition Purchase Orders
and a form MK 156. Howell argues that the indemnity provision of
the MK 156 gives the contractor's employees a third-party
beneficiary claim against KPC. The MK 156 states:
1. Contractor shall protect and save
harmless, indemnify and defend Company and its property against and
from all claims for property damage or personal injury (including
death) and against and from all claims, including lien claims for
material and labor furnished caused by Contractor's (including
Contractor's employees and agents) negligent acts or omissions,
breach of warranty, breach of contract, similar fault or
intentional misconduct in the performance of services hereunder;
such indemnity to include full and reasonable attorney's fees and
costs actually incurred by Company in its defense or actually
incurred by Company in the enforcement of any terms of this
contract. To the extent the liability exceeds the minimum limit
set forth in 2.b below, Company agrees to protect, save harmless,
indemnify and defend Contractor, its agents and employees from and
against all loss, injury, damage and legal liability including
attorneys [sic] fees and other costs of defense arising out of any
negligent act of Company, its agents and employees and not caused
in whole or in part by Contractor, its agents or employees.
2. Contractor will insure and cause its
insurer to provide proof of insurance to Company with the following
. . . .
b. Public liability insurance in the
amount of One Million Dollars (Combined Single Limit) ($1,000,000)
per occurrence for property damage; One Million Dollars (Combined
Single Limit) ($1,000,000) for each occurrence for bodily/injury or
death sustained by anyone including Contractor's employees during
the course of, or on the site of, Contractor's contract work herein
at Company's Alaska property.
The superior court granted KPC summary judgment on
Howell's third-party beneficiary claim, concluding that the
contract between KPC and GE/QCI was not intended to benefit Howell.
It granted KPC summary judgment on the breach of warranty claim,
concluding that Howell's claim arose in tort and therefore it was
barred by the two-year statute of limitations for tort claims.
A. Standard of Review
We review the superior court's grant of summary judgment
de novo. Nielson v. Benton, 903 P.2d 1049, 1052 (Alaska 1995). We
will affirm summary judgment if there are no genuine issues of
material fact and if the moving party is entitled to judgment as a
matter of law. In re Estate of Evans, 901 P.2d 1138, 1140 (Alaska
1995). When making this determination, we draw all reasonable
inferences in favor of the non-moving party. Bishop v.
Municipality of Anchorage, 899 P.2d 149, 153 (1995).
B. Third-Party Beneficiary Claim
To bestow third-party beneficiary stature on GE/QCI
employees, KPC and GE/QCI must have intended their contract to
benefit the employees. Kodiak Elec. Ass'n v. DeLaval Turbine,
Inc., 694 P.2d 150, 154 (Alaska 1984); State v. Osborne, 607 P.2d
369, 371 (Alaska 1980). The motives of the parties, including
those of the promisee, are determinative. Osborne, 607 P.2d at
Howell relies on cases involving contracts between
employers and unions to support his argument that he is a third-
party beneficiary of the contract between GE/QCI and KPC. See
Goldies, Inc. v. Alaska Hotel and Restaurant Employees Health and
Welfare Fund, 622 P.2d 979 (Alaska 1981); Continental Ins. Co. v.
Bussell, 498 P.2d 706 (Alaska 1972). These cases are
distinguishable from the present case. Unions are created for the
benefit of employees. By contrast, GE/QCI and KPC do not exist for
the benefit of the GE/QCI employees, for whom any benefit of the
contract between GE/QCI and KPC is incidental to that contract.
However, GE/QCI and KPC do have an interest in allocating liability
to protect themselves from potential lawsuits brought by employees
as a result of injury on the job. That is the issue addressed by
the MK 156.
In Osborne, we stated that a house builder's employee had
no third-party right arising out of the contract between the house
builder and buyers, because there was no evidence that the motive
of the builder and buyers in entering the contract was to benefit
the employee. 607 P.2d at 371. The reasoning of Osborne applies
to this case. The superior court stated:
In this case it would be impossible for a
reasonable jury to conclude that one of the purposes of the
contract between General Electric and Ketchikan Public Utilities
[sic] was to benefit Steven Howell. . . . The MK 156 and
associated documents (Exhibits to defendant's reply of February 1,
1995) simply show efforts to reallocate liability between the two
contracting parties - for their benefit - not that of third parties
such as plaintiff.
Although language in the MK 156 provides for liability coverage for
injury sustained by GE/QCI employees, no evidence exists that this
language was motivated by a desire on the part of the contracting
parties to benefit the employees. Rather, the clause protects the
contracting parties by allocating liability between them. Howell
has made no showing that the contract was intended for any other
C. Breach of Warranty Claim
Generally, the nature of the injury determines whether
the complaint sounds in contract or in tort. Breck v. Moore, 910
P.2d 599, 603 (Alaska 1996). The personal injuries Howell
sustained as a result of the explosion of a boiler on KPC's
premises typically are embodied in a tort claim. Determining the
nature of the claim also determines the applicable statute of
limitations period. The statute of limitations is six years for a
contract claim and two years for a tort claim involving personal
injuries. AS 09.10.050; AS 09.10.070. Howell's tort claim is
subject to the two-year statute of limitations. Howell's injury
occurred in 1991. He filed his complaint in 1994. The statute of
limitations has run. [Fn. 2]
The judgment of the superior court, granting summary
judgment for KPC on Howell's third-party beneficiary and breach of
warranty claims, is AFFIRMED.
KPC accepts this fact for the purposes of its initial Motion
for Summary Judgment and this appeal only.
Were we to reach Howell's breach of warranty claim on its
merits, it would fail. Howell bases this claim on the Uniform
Commercial Code (UCC). The UCC provisions applicable to breach of
warranty claims are limited to cases involving the sale of goods.
AS 45.02.101-106. A breach of warranty occurs when the seller
tenders the defective goods to the buyer. AS 45.02.725(b). "A
'sale' consists in the passing of title from the seller to the
buyer for a price." AS 45.02.106(a).
Howell alleges no facts concerning the sale, purchase,
tender, or title of the boiler. Nor does he present any evidence
concerning the manufacturer or purchaser of the boiler. Since
there is no sale of goods, Howell's UCC claim fails.